EnerVest Diversified Income Trust
TSX : EIT.UN

EnerVest Diversified Income Trust

October 17, 2008 09:30 ET

EnerVest Diversified Income Trust:

A) EXTENDS THE ENHANCED EXCHANGE OFFERING TO NOVEMBER 5, 2008; B) EXTENDS THE RELATED WARRANT OFFERING; C) ANNOUNCES OCTOBER DISTRIBUTION OF $0.07/UNIT; AND D) REDUCES ITS INDEBTEDNESS.

CALGARY, ALBERTA--(Marketwire - Oct. 17, 2008) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA.

EnerVest Diversified Income Trust (TSX:EIT.UN)("EnerVest" or the "Fund"), Canada's largest and most liquid closed-end diversified income fund is:

A) Extending the time for acceptance of its Enhanced Exchange Offer to Wednesday, November 5th at 4:00 pm EST ("the Deposit Date"). This is an opportunity for long term investors to take advantage of current market conditions, diversification and proven professional management of the EnerVest portfolio;

B) Extending the Warrant Offering to Existing EnerVest Unitholders of record on or about November 26, 2008 ("The Warrant Record Date");

C) Announcing the distribution of $0.07/unit to unitholders of record on October 31, 2008; and

D) Reducing its outstanding indebtedness.

A) EXCHANGE OFFER EXTENDED

In recognition of recent market conditions and to provide investors and their advisors more time to consider the merits of the Enhanced Exchange Offer, EnerVest is extending the exchange offer for an additional three weeks to November 5. We also recognize that given recent market volatility, prices for Issuer Securities and EnerVest units may not result in exchange ratios which reflect underlying values, and for that reason may not be fair to Holders of Issuer Securities and to EnerVest's existing Unitholders. We believe that an extension of the Deposit Date to November 5, 2008 will allow for exchange ratios to be set during a period of greater stability.

On September 26, 2008 EnerVest filed a preliminary short form prospectus for a treasury offering of its units to be issued in connection with an exchange offering (the "Exchange Offer"), enhanced by the preferential distribution of discounted warrants available to existing Unitholders of record on the Warrant Record Date (the "Warrant Offer") - see below. The Manager expects to file an amended and restated preliminary prospectus to reflect the changes to the Exchange Offer and the Warrant Offering discussed in their news release on or about October 22, 2008. All other terms of the prospectus are the same as previously filed.

Benefits of the Enhanced Exchange Offer:

- Lower risk through diversification over a broad range of issuers

- Monthly tax-efficient distribution

- No investor costs or brokerage fees associated with the exchange offering

- Attractive entry points into high-quality names for long-term investors

- Receive quality income producing assets at attractive prices as well as reduced risk within a professionally managed portfolio.

Visit www.enervest.com for more information, including the list of issuers.

B) WARRANT OFFER EXTENDED

Subject to successful completion of the Exchange Offer, it is expected that warrants will be issued to existing Unitholders of record on or about November 26, 2008 and the Warrant Exercise Date will be on or about December 18, 2008. The number of warrants to be issued is subject to adjustment in the event investors under the Exchange Offer exercise rescission rights, and a final determination in this regard is expected to be made on or about November 18, 2008.

Benefits of the Warrant Offer:

- Purchase EnerVest Units at 20% discount to the EnerVest exchange price

- Participate in the future growth and recovery of current economic conditions at a substantial discount to market prices

- Opportunity to reposition existing portfolio in advance of 2011 tax changes

C) DISTRIBUTION

EnerVest announces that the record date for the next monthly distribution is October 31, 2008. The payment date will be November 14, 2008.

EnerVest will distribute $0.07 per unit. The Manager anticipates that approximately 45% of the distributions declared for the current fiscal year will not be included in taxable income for 2008.

EnerVest's closing unit price on October 15, 2008 was $3.68 for an effective annual yield of 22.8%.

D) REDUCTION OF INDEBTEDNESS

In response to recent market conditions and in consultation with the Fund's lenders, the Manager has raised sufficient cash to reduce the amount outstanding under the Fund's loan facility to less than $300 million on or about October 17, 2008 from $376 million at October 7, 2008. With this repayment, the Manager has further improved the Fund's already strong financial position with loan coverage of approximately 5.1 times based on the current market value of the Fund's portfolio. This means that for every $1.00 of loan, the Fund has $5.10 in assets at current market values. The Manager will continue to carefully assess the Fund's financial position given ongoing market uncertainty with the objective of maintaining the Fund's financial strength in the event markets remain volatile.

Effective October 7, 2008, there was a technical breach of a covenant under the terms of the Fund's loan facility which does not pertain to loan quality or debt coverage. Prior to this breach the Fund had a clean credit history with its lenders. This covenant required that the Net Asset Value (NAV) of the Fund must not decline by 30% in any month or any portion of a 12 month period. Due to overall market declines, the Fund's NAV experienced such a decline on October 7 from the historic high set in June 2008.

The Manager is in discussions with the Fund's lenders to obtain a waiver of the breach, which will likely include a condition requiring the reduction in the facility size from $400 million to $300 million, and other changes reflective of the current market for credit. The Manager believes that reduced leverage in this market is appropriate and, as noted above, has already taken action to reduce the loan amount outstanding below the $300 million level. The Manager does not expect any of these changes to be impactful to the operation of the Fund.

Certain statements included in this news release constitute forward-looking statements. The forward-looking statements are not historical facts but reflect EnerVest Diversified Management Inc.'s (the "Manager") current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the ability of the Manager to pay the distributions on the dates specified. Although the Manager believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. The Manager undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • EnerVest Diversified Management Inc.
    Jacob Roorda
    President & Chief Executive Officer
    (403) 571-5550 or Toll Free: 1-800-459-3384
    or
    EnerVest Diversified Management Inc.
    Jane Depraitere
    Chief Operating Officer
    (403) 571-5550 or Toll Free: 1-800-459-3384
    or
    EnerVest Diversified Management Inc.
    Suite 2800, 700-9th Avenue S.W.
    Calgary, Alberta, T2P 3V4
    (403) 571-5550 or Toll Free: 1-800-459-3384
    (403) 571-5554 (FAX)
    Email: info@enervest.com
    Website: www.enervest.com